I had the rate of my upcoming mortgage locked, but the APR presented to me a couple of weeks later was already different (obviously higher!) and proclaimed subject to more changes any time before closing. I mean, how is this possible in the first place?
As many other borrowers, you probably got deceived by the APR’s apparent similarity to the interest rate and assumed that “locking the rate” means locking all the rates involved. Unfortunately for borrowers, that is not the case. The APR does not only include the interest rate and the points, which do get locked, but also the closing costs, origination fees and other cash-based parameters, which do not get locked, ever. When you lock the rate, you lock the interest rate and the points only. In the time between the locking and the closing, the lender is free to change all the other included into the APR fees at will. Some lenders are not shy to exercise the right. An increased APR means that at closing you will have to pay more than the original estimation of charges. It is always hard to say whether it originally was an intentional underestimation of costs presented by the lender in an attempt to attract a customer, though.
